Consumer sentiment dips in early October

NEW YORK (Reuters) - U.S. consumer sentiment unexpectedly dipped in early October to its weakest level since July, with buying plans on the decline, a survey released Friday showed.

Also, consumers’ assessments of government economic policies fell to the lowest level since U.S. President Barack Obama took office, it showed.

The Thomson Reuters/University of Michigan’s preliminary October reading on the overall index on consumer sentiment came in at 67.9, down from 68.2 in September and below the 69.0 median forecast among economists polled by Reuters.

The survey’s barometer of current economic conditions was at the lowest level since November 2009. The index was at 73 in early October, compared with 79.6 in September and 79.8 forecast by analysts.

Consumer spending typically accounts for about two-thirds of U.S. economic activity and is considered critical to the recovery. It’s especially watched in the months ahead of the U.S. holidays, a key period for retailers.

“Personal financial expectations were near their all-time low, and the steep decline in buying plans was related to uncertainty about consumers’ future income prospects,” the survey’s director Richard Curtin said in a statement.

The survey’s gauge of consumer expectations rose to 64.6, above last month’s 60.9 reading and a forecast for 61.5.

The measure on consumers’ 12-month economic outlook rose to 70 compared with 61 in September.

The survey’s one-year inflation expectations measure rose to 2.6 percent from 2.2 percent in September, while its five-to-10-year inflation outlook index was unchanged from September at 2.7 percent.

Reporting by Caroline Valetkevitch, Editing by Chizu Nomiyama